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Strategies & Market Trends : VOLTAIRE'S PORCH-MODERATED -- Ignore unavailable to you. Want to Upgrade?

To: Jim Willie CB who wrote (10439)	10/30/2000 10:49:41 PM
From: RR	Read Replies (1) \| Respond to of 65232

Cornbread: Do "square rooters" MOO? Oh come on, give the Porch a big ole MOO! Come on..... u can do it. Give us a MOO! RR

To: Jim Willie CB who wrote (10439)	10/30/2000 10:56:11 PM
From: SecularBull	Read Replies (2) \| Respond to of 65232

Look at this one from Forbes: forbes.com Get 'em While They're Cold STOCK MARKET INVESTORS ARE always manic-depressive. Rarely, however, have investors demonstrated their ability to shoot to higher highs or slump to lower lows than over the past year, as they have tried to price the debt and equity of the entrepreneurial companies laying the pipes through which will flow much of the commerce of the information age. We're talking about the outfits that are digging up streets and laying down fiber-optic cable, mostly in the U.S. and Europe. Through these broadband conduits will flow interactive media and the always-on Internet services that will someday be as common as water and electricity. But the market's tech malaise has clobbered broadband fiber stocks, as well as their junk bonds. The fears: too much debt; too many companies laying too much fiber; too many carriers planning to raise money to build wireless networks. Nevertheless, the magnitude of the collapse in prices suggests that these problems have now been priced into the broadband companies' shares and bonds. Time for a contrarian play, with bargains abounding in bandwidth. And time to look twice at some of the fears. Like the one about a bandwidth glut. Yes, there is a lot of capacity going in the ground. But the demand for big pipes to carry bits of information--whether in the form of basic data files or video libraries--is exploding. Many consultants are forecasting that the number of broadband connections in Europe will increase thirtyfold over the next four years. To judge from history, the predictions will probably prove far too conservative. Why? Because there is no way to know how many new information-based services will be developed once the delivery networks are in place. It's like trying to predict car sales before the highways are paved. According to research at Lucent's Bell Labs, demand has consistently outstripped forecasts within a matter of a few years. In 1978 Bell Labs believed that the world would never need to move more than one gigabit of data at a time. Capacity is now more like 1,000 times those early forecasts. What about all those wireless broadband networks under construction in Europe? They will in fact help global broadband pipe builders. Much of the wireless Web will pass through the terrestrial lines on its way to mobile handsets. The financing needs of laying fiber in the ground and installing servers and software to carry massive amounts of data look downright reasonable compared with the costs of building a wireless network. The price tag for building new wireless networks in western Europe will be something like $175 billion. By contrast, the top ten fiber-optic builders in Europe will need only another $20 billion to $40 billion over the next few years. No question that the falling prices that telecoms can charge for bandwidth are frightening at first glance. "Prices for pure capacity will fall on the order of 70% a year for the next two to three years--and that's a conservative estimate," says Oleksiy Soroka, a junk bond analyst in London for Credit Suisse First Boston. The dark cloud on the horizon is a hesitancy by investors to put up the capital that companies need to keep building their networks. Many of the smaller players already loaded down with debt won't get capital. For them and their investors the best hope is an opportunistic takeover by a bigger player with a healthier balance sheet. Companies in this vulnerable class: RSL, Thus and Global TeleSystems. By contrast, for the healthier operators the capital markets remain open even now, although terms are far less generous than a year ago. Example: Energis, a London-based upstart competing in local service. Energis raised $564 million in new equity on Sept. 21 but at tremendous cost to shareholders. Its shares sank 16% in the two days after the financing was announced, wiping $1.5 billion from its market capitalization. As public investors have stampeded out of broadband carriers, shrewd private-equity investors have moved in. Anthony Klarman and Melvin Rosa, junk-bond telecom analysts with Deutsche Bank, calculate that such private equity outfits as Forstmann Little, Hicks Muse, Vulcan and Thomas Lee have, in the past year, invested close to $10 billion in U.S. companies competing in the local market. Another likely source of money: vendor financing from Nortel, Lucent, Motorola and other equipment makers. Possible winners: Cable & Wireless: It bought MCI Networks in 1998 and is now buying fiber in Europe, giving it immediate installed capacity at a bargain price. Unlike the upstarts it competes against, C&W will make money next year and has great global reach. The pile of cash and shares it received from selling Hongkong Telecom makes it a takeover target. KPN Qwest: This firm combines the know-how that KPN, the Dutch national carrier, has in Europe with the management and engineering talent from U.S. broadband-builder Qwest. The 18-month-old company is on much more solid ground than most of its competitors. KPN Qwest already has more high-quality fiber in the ground than any other challenger to Europe's national carriers. It has a Web-hosting joint venture with IBM and plans to steal a march on some local carriers with its high-speed DSL services. XO Communications: Controlled by Craig McCaw, the U.S. cellular baron, the six-year-old company (formerly Nextlink) is in some U.S. cities and bought an international Internet service provider last year, giving it entry to the European market. XO is also in the process of purchasing a fiber network connecting 21 European cities; it will be ready by next year. XO has pushed hard into data services, which will provide 40% of revenues this year. Level 3: James Crowe, the man who built Uunet, an early Internet backbone, is at it again with Level 3 Communications. Level 3 is a pure Internet Protocol network, already up and running in big U.S. cities and in five European markets. Crowe promises "aggressive and disruptive" bandwidth pricing. Energis: The London-based company focuses on business clients, where margins are higher, and is moving from voice traffic to data. Colt: This is an eight-year-old London-based competitor in local markets with a U.K. network "second to none," says Sean Johnstone, a telecom analyst at SG Securities in London. But it is still primarily a voice carrier. It aims to add more cities to its network and expand data services from the U.K. to the Continent. One market whisper: a merger with KPN Qwest.